How Does UK Inheritance Tax Work for Foreigners?
Written by: Marcus M. Araz, MBA, PhD · Updated:
Your UK home is subject to UK Inheritance Tax wherever you live and whatever your nationality. The tax is 40% on the part of your UK assets above £325,000. For an investor who does not live in the UK, generally only UK assets count; your assets in Turkey or other countries do not. A mortgage on the home reduces its taxable value. There is no double taxation treaty on inheritance tax between Turkey and the UK.
The basic rules
| Topic | Rule |
|---|---|
| Rate | 40% on the part above the tax-free amount |
| Tax-free amount (nil rate band) | £325,000; this amount has been fixed for a long time and is frozen |
| Additional residence allowance (residence nil rate band) | Up to £175,000; only if a home the person lived in passes to their children or grandchildren. It does not apply to an investment flat you never lived in |
| People not living in the UK | Only UK assets are taxed |
| Long-term residents | For those UK resident in at least 10 of the last 20 tax years, worldwide assets are taxed (since 6 April 2025) |
| Ownership through a company or trust | UK residential property is taxed even if held through an overseas company or trust |
| Transfers between spouses | Generally tax-free; where a long-term UK resident leaves assets to a spouse who is not a long-term resident, the exemption is capped at £325,000 (this can be changed by making an election) |
| Payment deadline | 6 months from the end of the month of death; tax on property can be paid in instalments over 10 years |
Worked example
An investor living in Turkey, with no other UK assets, who owns a £500,000 flat in London:
| No mortgage | £200,000 mortgage | |
|---|---|---|
| Value of the flat | £500,000 | £500,000 |
| Mortgage debt | 0 | £200,000 |
| Taxable value | £500,000 | £300,000 |
| Tax-free amount | £325,000 | £325,000 |
| Inheritance tax (40%) | £70,000 | 0 |
The example assumes the full tax-free amount is available and no gifts were made in the seven years before death. Certain conditions apply for the debt to be deductible; work out your own position with a tax adviser.
Legal ways to reduce the tax
- Buying with a mortgage: debt secured on the property reduces its taxable value. Mortgage options for foreign buyers are covered on our Can I get a mortgage in the UK page.
- Lifetime gifts: a gift made during your lifetime falls outside inheritance tax if you live another seven years; between three and seven years the tax tapers down. Gifting UK property can trigger other taxes, such as capital gains tax.
- Joint ownership: if the flat is bought jointly by spouses as tenants in common, each spouse’s share is assessed separately and each can use their own tax-free amount.
- Life insurance: a life policy written in trust gives the heirs cash to pay the tax.
The outcome of each of these depends on the person’s residence, family situation and tax position in Turkey. Deciding with a tax adviser whose name the title goes in and which structure to use before buying is far cheaper than changing it later.
The Turkish side
Assets abroad inherited by an heir resident in Turkey may also be subject to Turkish inheritance and transfer tax. As there is no inheritance tax treaty between the two countries, the same asset may be taxed in both and relief may be limited. That is why it matters that a UK tax adviser and your accountant in Turkey work together.
The process for heirs
- Will: a separate English will for UK assets speeds things up considerably for the heirs. A Turkish will can also be recognised, but translation and validation take longer.
- Grant of probate: a UK grant of probate is needed before the flat can be sold or transferred to an heir. Inheritance tax is paid, or put on instalments, before the grant is issued.
- Rent continues: the tenant stays in the flat during the process and the rent is added to the estate.
Frequently asked questions
Do foreigners pay inheritance tax in the UK? Yes, on their UK assets. A home in the UK is subject to UK inheritance tax whatever the owner’s nationality and country of residence.
What is the UK inheritance tax rate? 40% on the part above the £325,000 tax-free amount.
Are my assets in Turkey also subject to UK inheritance tax? If you do not live in the UK, generally no; only UK assets count. If you have been UK resident in at least 10 of the last 20 tax years, your worldwide assets are included.
Does a mortgage reduce inheritance tax? Yes. A mortgage secured on the property is generally deducted from the taxable value; certain conditions apply.
Does buying through a company avoid inheritance tax? No. Since 2017 UK residential property is subject to inheritance tax even if held through an overseas company or trust.
Is there an inheritance tax treaty between Turkey and the UK? No. The two countries have a double taxation treaty for income tax, but not for inheritance tax.
Related pages
What do I need to do to buy a home in the UK from Türkiye, UK rental income tax and The cost of buying a home in the UK.
Sources
Rates, tax-free amounts and payment rules are based on GOV.UK and HMRC’s long-term residence guidance . The residence-based system in force since 6 April 2025 was introduced by the Finance Act 2025. Tax rules may change; this page is for general information.
How we help you with this
As capital.works®, the Overseas Property Centre, we represent selected developments in England. There are currently 80 English developments live on the site, each with its price list, floor plans and completion schedule on its own page. We are an FCA authorised credit broker (FRN 1049015) and a member of the NACFB; the purchase, the finance, residency and post completion management are all run by one team.
Legal notice
capital.works® (YATIRIM UK LIMITED) is a real estate advisory company; it does not provide legal or tax advice. The title and contract process is carried out by a solicitor registered in the UK. On the mortgage side, our FCA authorisation applies (FRN 1049015, authorised credit broker).
The next step
Tell us the flat you are considering and your family situation, and we will set out the ownership and finance options together in a form you can review with your tax adviser: Contact us.